Saga share price: what’s the outlook as turnaround plans gets underway?
The over 50s insurance and holiday brand is busy executing its turnaround strategy amid a difficult insurance and travel market, providing little support to its share price.
Saga continues to rely heavily on its insurance business to prop up profits, while the troubling travel market continues to negatively impact its results.
Insurance broking accounted for 59% of the company’s profits in 2018, but even that has taken a hit with Saga struggling to keep customers onboard as increased competition and ease of switching provider making it a challenging market to navigate.
AGM statement sends share price south
In the wake of its AGM statement, which saw Saga warn investors how political uncertainties were weighing on its tour operator business, its share price fell more than 14% to £32.28 on Wednesday last week.
The company used the statement to also mention how ‘despite challenging trading conditions in both insurance and travel markets’ the over 50s insurance and tour operator has seen trading between February 1 to June 18 remain in line with expectations.
‘We are resolutely focused on the execution of our new strategy and have a clear set of priorities,’ Saga CEO Lance Batchelor said.
‘Against challenging headwinds in both travel and insurance, we see early signs of progress in stabilising our Retail Broking business and forward bookings for the Cruise business have been resilient,’ he added.
Saga ‘vulnerable to takeover’ as share price sinks
Saga’s turnaround plan will need to reap results sooner rather than later, with the company’s sliding share price leaving its ‘vulnerable to takeover’, according to AJ Bell Investment Director Russ Mould in an interview with ThisIsMoney.
‘The company is in a sticky mess and is now reliant on flawless execution to try and put the business back on track,’ he said. ‘The very depressed market valuation leaves Saga vulnerable to takeover interest from rivals.’
‘Despite the recent setbacks its brand still has considerable value and it does have a large customer base which presents opportunities to make money should someone feel brave enough to buy the company while it is on its knees,’ he added.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Be ready to act on ECB opportunities
Learn how the ECB’s monetary policy announcements affect interest rates and price stability ahead of its next meeting in 22 April 2021.
- How might the next meeting affect the markets?
- What are the key rate decisions to watch?
- Why is the Governing Council announcement important for traders?
Live prices on most popular markets